European integration has to be attractive and feasible in the short term for Ukraine to compensate for the loss of the Russian market and punitive energy pricing – says Kataryna Wolczuk

It has taken Ukraine two waves of mass protests to conclude a new agreement with the European Union. One of the concessions to Ukraine following the Orange Revolution of 2004 was to open negotiations on the association agreement in 2007. It took a second revolution, with more than 100 people killed, to pave the way for the signing of an agreement after president Viktor Yanukovych was deposed in February 2014.

The association agreement with a deep and comprehensive free trade area contains binding provisions on Ukraine to align its laws and policies with those of the EU acquis. By going beyond purely trade issues it carries a promise of improving the quality of democracy, governance and the rule of law in the country.

Without a doubt, integration into the European single market offers the best chance for Ukraine to modernise and foster economic growth. This provides a clear long-term vision – economic integration with the EU will anchor the reforms of the economy and the state apparatus thereby transforming Ukraine in a ‘normal European country’ – a sentiment expressed so vividly by the protesters on the Maidan.

Now it is time to ensure that the agreement becomes an effective tool for achieving this vision. This means that it cannot be regarded merely as one of many trade agreements signed by the EU. However, while the pact is very ambitious, there is no roadmap to facilitate its implementation even though Ukraine is to approximate 80-90 per cent of the acquis. For certain, that the agreement is asymmetric in favour of Ukraine – Kiev will open its borders to EU goods in a progressive way – is a positive feature.

However, asymmetry is insufficient to ensure the state’s readiness to withstand competitive pressures from Europe once the transition periods are over. Alignment with acquis requires Ukraine to bear up-front political and economic costs, which the new Ukrainian authorities may not be able to afford nor cope with in terms of the domestic and external ramifications.

For example, to meet European requirements in the area of food safety it has to create laboratories, introduce inspections and carry out extensive training. Yet, the state agencies suffer from low capacity, inadequate staffing and lack of resources to engage in this process. Therefore, more guidance and support is needed to transpose the acquis against the backdrop of Russia’s efforts to undermine European integration as a viable option for Ukraine.

Russia’s policy aims to derail Ukraine’s European choice and attract to its own bloc – the Eurasian Economic Union. Following Yanukovych’s ousting, Putin’s determination to punish the country for its Westward orientation is already evident, even by transgressing domestic and international law. As a result, the high price imposed by Moscow for moving away from Russia further increases the costs of Ukraine’s economic integration with the EU.

Russia endeavours to build the Eurasian Economic Union by 2015 with a single Eurasian market, from which Ukraine will be increasingly excluded through political and economic means, after refusing to join it. Yet, Russia remains an important trading partner for Ukraine – attracting more than 20 per cent of Ukrainian exports, just below the EU on more than 21 per cent. Russia already utilises a range of punitive measures to exploit Ukraine’s economic and energy dependency, aside other forms of direct intervention.

Therefore, economic re-orientation away from Russia will remain politically and economically challenging for Ukraine. So what the EU has so far approached as a technical process of rule diffusion to Ukraine is now a political and geopolitical matter. As Swedish Foreign Minister Carl Bildt pointed out: “The single most important thing we can do – make Ukraine succeed. This is a game for the future of Ukraine.”

European integration has to be attractive and feasible in the short term to compensate for the loss of the Russian market and punitive energy pricing. Europe needs to refine its approach to ensure cost-effective implementation of the DCFTA. First, this requires careful sequencing and prioritisation of the reform process to enable Ukraine to maximise the benefits in the short-to-medium term.

Second, an effective and wide-ranging informational campaign needs to be launched to ensure that the importance and requirements of the DCFTA are well understood across the country to counteract the Russian campaign to discredit the agreement in Ukraine – especially in its southern and eastern regions.

Finally, the current level of assistance is insufficient for the comprehensive implementation of the DCFTA. Assistance levels need to be increased but, more importantly, funds have to be spent in a highly strategic way through sequencing and prioritisation of reform measures to accelerate Ukraine’s integration into the single market. Turning the association agreement into a success story hinges on crafting a viable strategy for cementing Ukraine’s pro-European orientation.